Chrysler Building Likely to Be Purchased in All Cash
By Lauren Elkies Schram March 19, 2019 3:30 pm
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RFR Realty and Signa Holding GmbH—Austria’s largest privately owned real estate company—are expected to acquire the leasehold for the Chrysler Building for $151 million in equity, Commercial Observer has learned. The contracts was signed two Fridays ago and the deal is slated to close in a few weeks, sources said.
Tishman Speyer and Abu Dhabi Investment Council (ADIC) put the iconic 77-story skyscraper at 405 Lexington Avenue on the market in January, and offers followed at around the $100-million mark. On March 8, bidders that CO contacted immediately after the news broke about the final sale price said it was still “surprisingly high.”
The low price reflects the tricky underwriting of the deal that encompasses expensive renovations as well as a reset of the property’s ground lease—which is owned by the Cooper Union school—as CO reported when the property hit the market. In 2018, the rent increased to $32.5 million from $7.8 million and will increase again in 2028. Plus, the building requires about $200 million in renovations, the sources said.
RFR will be the operating partner of the property between East 43rd and East 44th Streets, which is 75 percent vacant, set to increase to 80 percent vacant when some of the leases expire in the near future, sources said. Currently, the building is home to Creative Arts Agency, the law firm Moses & Singer and coworking firm Spaces, which signed an 111,000-square-foot lease in September 2018. And Amazon (AMZN) Go, Amazon‘s convenience store chain, will be a tenant in the building, The New York Post reported.
The $151 million price is still a shock, seeing as Tishman Speyer, sold a 90 percent stake in the building to ADIC for $800 million at the height of the market in 2008, retaining the remaining 10 percent ownership stake, as CO previously reported.
As for why Tishman Speyer and ADIC decided to sell now, one source said: “It’s just a decision of the partnership.”
Darcy Stacom and William Shanahan are representing the sellers in the deal. They declined to comment. RFR and Signa have no broker in the deal. A spokeswoman for RFR didn’t immediately respond to a request for comment.
